Florida proposes tough new rules for mortgage brokers

After months of stinging criticism for letting crooks and con artists prey on Florida borrowers, regulators have proposed sweeping changes in state law that would make Florida one of the most tightly regulated mortgage markets in the country.

The provisions call for annual criminal background checks for everyone selling mortgages in Florida, a ban on the most toxic types of loans and reviving a state fund that used to compensate victims of mortgage fraud.

The fund would provide up to $50,000 for people who can prove they were scammed by rogue brokers. Regulators quietly killed a similar fund more than 10 years ago, then used the money to pay for operating expenses, like salaries and conferences at five-star hotels, The Miami Herald reported in September.

Terry Straub, finance director for the Office of Financial Regulation, which is drafting the new bill, said restoring the fund is "the equitable thing to do."

The measures would add to a regulatory overhaul that began in September after a Miami Herald investigation showed the agency allowed more than 10,000 people with criminal records to work in the mortgage profession between 2000 and 2007.